After European prices dropped below the Asian benchmark, creating an opportunity for eastward deliveries, four liquefied natural gas cargoes that were originally headed for Europe shifted their route to Asia in the past two weeks.
In a year when Europe would require up to 250 more LNG cargoes to replenish its depleted gas supplies before winter, more cargoes switching from the Atlantic to the Pacific would intensify rivalry between the two basins.
According to Go Katayama, chief insight analyst at data analytics firm Kpler, there was a clear, if limited, economic basis for redirection due to a mix of increased netbacks to Asia and lessening European price support rather than stronger Asian demand.
"JKM premiums over TTF have widened, improving netbacks for U.S.-origin cargoes," he said.
"This has reopened the arbitrage channel, particularly for June to July delivery windows."
The benchmark price for LNG for spot physical cargoes in Asia is the Japan-Korea-Marker. The standard for natural gas in Europe is the Dutch Title Transfer Facility.
The German company RWE's Energy Innovator tanker left Freeport LNG in Texas, according to Kpler statistics. On April 16, it changed course and headed for the Cape of Good Hope instead of Dunkirk, France.
After leaving Sabine Pass LNG in Louisiana on April 16, the Shell-owned New Nature tanker likewise veered southward from Europe on April 24.
According to Alex Froley, senior LNG analyst at data intelligence company ICIS, two additional tankers have also been scheduled to arrive later, indicating a change in destination from Europe to Asia, which adds a few weeks of journey time.
The arrival date of the Pacific Success tanker was shifted from April 22 to May 18, and the arrival date of the Orion Spirit tanker was shifted from April 24 to May 14, he stated.
According to Kpler data, the TotalEnergies-controlled Orion Spirit and Pacific Success were originally headed toward Rostock, Germany, and Dunkirk, France, respectively.
Furthermore, Froley noted that the British Sponsor tanker is sailing towards Asia with the first supply from the Greater Tortue Ahmeyim project offshore Mauritania and Senegal, despite its close proximity to Europe.
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Due to weak demand, Asian spot LNG prices had been hovering around one-year lows since mid-April. On April 25, they were last valued at $11.80 per million British thermal units.